• Service: Tax, Global Indirect Tax, International Executive Services
  • Type: Regulatory update
  • Date: 10/28/2011

Belgium - Guidance for VAT deductions with respect to company cars 

November 4:  The Belgian tax authorities announced that execution of the recent guidance relating to the new rules on input VAT deduction for business assets (such as company cars, described below) is suspended until further notice.

October 28:  The Belgian tax authorities have clarified the conditions for the deduction of input value added tax (VAT) with respect to company cars that are used partly for private, non-business purposes.

Under a 20 October 2011 administrative decision, the tax authorities explained that to determine the input VAT deduction with respect to a company car, a distinction is made between situations when the company has acquired the automobile that is put at the disposal of a director, manager, or staff member, and situations when the car is leased by the company.

Also, a taxpayer purchasing a car must take into consideration, from the beginning, the fact that the car will be used by its staff member for other than business purposes. When the taxpayer puts the car at the disposal of a staff member, at no cost, for both business and private use, the input VAT deduction generally will be limited—based on an estimate of kilometers of private use versus business use. The estimate may have to be modified if necessary by the taxpayer, and supporting documents must be maintained.

To read an October 2011 report concerning the rules for VAT deductions for company cars, prepared by the KPMG member firm in Belgium: Company cars—the rules for the VAT deduction will change (268 KB)

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